Simultaneous optimization of plant design, control unlocks cost-competitive green hydrogen

Achieving cost-competitiveness for green hydrogen produced via water electrolysis using intermittent renewable energy sources remains a significant challenge. Researchers from LUT University in Finland have shown that considerable cost reductions can be achieved by simultaneously optimizing plant control and design, based on specific hydrogen demand targets and local weather conditions.

Achieving cost-competitive green hydrogen production is crucial for transitioning to a net-zero greenhouse gas emissions economy. Green hydrogen provides a viable solution for decarbonizing industries that are among the heaviest polluters, including metal production, heavy transportation, chemicals, and energy-intensive sectors that currently rely on fossil fuels. It plays a central role in Power-to-X (PtX) technologies and serves as a key feedstock for producing synthetic fuels and chemicals, such as e-methanol, e-ammonia, and e-kerosene.

In the metal industry, which accounts for around 7% of global CO₂ emissions, direct reduction of iron using green hydrogen could replace blast furnaces which would eliminate the carbon dioxide emissions from the reduction process. For heavy transportation where direct electrification is not possible, green hydrogen-based e-fuels could provide an attractive option in reducing carbon footprint. For the chemical industry, hydrogen is already widely used as a feedstock for many processes such as ammonia and methanol production. Replacing the currently used natural gas-based hydrogen with green hydrogen would lead to significant reductions in emissions.

Furthermore, including water electrolyzers in the future electricity grid could be critical to improve its flexibility in two main ways. First, the produced green hydrogen can act as an energy storage for intermittent renewable energy and secondly, the electrolyzer devices act as a flexible power load thanks to their reasonable wide operating range. Both aspects are going to be extremely valuable in stabilizing a renewable-dominated grid.

However, dimensioning and controlling green hydrogen plants that rely on intermittent electricity from renewable sources is not a trivial task. The dynamic operation of electrolyzers is constrained by several factors, which – when combined with the intermittency of the power supply – can significantly impact hydrogen production costs.

Researchers from LUT University have investigated the optimization of green hydrogen production plants by simultaneously considering both the control and dimensioning of plant components, demonstrating that this approach can significantly reduce hydrogen production costs. The optimization method consists of a simulation model of an off-grid electrolyzer plant that utilizes solar PV, wind power, and batteries for short-term energy storage.

The optimization results showed that using batteries for energy storage improves the stability of the electricity supply and mitigates the risk of rapid electrolyzer shutdowns during periods without solar PV or wind power production. However, the battery price must fall below 0.30 €/Wh for them to be a cost-effective solution for overnight energy storage.

The degradation of the components, replacements, and operational expenses (Opex) also influence the optimal dimensioning and control of a hydrogen plant, particularly given the expected 25-30-year lifetime of such facilities. For an off-grid hydrogen production plant located in southeastern Finland, wind power alone was identified as the most cost-effective configuration, with the levelized cost of hydrogen (LCOH₂) potentially falling to €2/kg by 2030. However, by 2035-2040, projected price scenarios suggest that incorporating solar PV and batteries for short-term energy storage will become the optimal solution.

These findings strengthen the case for green hydrogen as a viable and increasingly competitive alternative, particularly when compared to hydrogen produced from natural gas via steam methane reforming (grey hydrogen), which typically costs between €1-1.5/kg, or with carbon capture and storage (blue hydrogen), where the cost rises to approximately €1.5-2/kg.

A recent publication focuses on baseload green hydrogen supply using an off-grid electrolysis plant. The study optimized the plant control and component capacities, including hydrogen storage in geological caverns, to minimize the LCOH₂ over a 30-year plant lifespan, while ensuring an uninterrupted hydrogen supply to a simulated end user.

The techno-economic optimization showed that, for a given electrolyzer capacity, there is a specific hydrogen demand rate that minimizes the LCOH₂. Notably, the most cost-effective plant configuration under the 2025 components price scenario combines solar PV and wind farms for electricity generation, along with a battery system for short-term energy storage. This indicates that, for an optimal plant, which is designed to meet a baseload hydrogen demand, including both batteries and solar PV minimizes the hydrogen supply costs.

When the electrolyzer's nominal capacity is fixed, and the hydrogen demand rate exceeds the optimal value, the system reaches a point where the electrolyzer plant must operate continuously. This requires oversizing the solar PV, wind farm and batteries, which increases the LCOH₂. Conversely, when the hydrogen demand is too low, the electrolyzer's hydrogen production capacity becomes excessive for the demand, reducing the economic return of the plant, which further increases the LCOH₂.

Another significant finding of the study was the difference in plant design when aiming to supply a baseload hydrogen, compared to a hydrogen plant optimized solely for minimizing production costs under the assumption of fully flexible hydrogen demand. The results indicate that enforcing a strict baseload demand can increase hydrogen production costs by up to €0.75/kg (+31%).

These results underscore the importance of further research into whether it is more cost-effective for green hydrogen producers or consumers to introduce greater flexibility – either in hydrogen production or on the demand side – to better align with the intermittency of renewable energy. Constraining plant control and design to a fixed hydrogen demand shifts the entire flexibility burden onto the production side. Increasing demand-side flexibility could reduce the required hydrogen storage capacity, battery energy capacity, and the need to oversize renewable power production systems, ultimately lowering green hydrogen production costs.

The solar PV and wind power data used in the studies were collected from southeastern Finland, making the results potentially applicable to other Nordic regions with similar weather conditions. Nevertheless, given Finland's ongoing transition toward net-zero emissions, solar PV and wind power are expected to become the dominant sources of electricity generation. This energy scenario emphasizes the importance of accurately dimensioning and controlling hydrogen production plants, particularly when relying on intermittent renewable energy sources, as this can significantly affect the cost of hydrogen supply.

Currently, the research team at LUT University is working on the future commercialization of these optimization methods, with the goal of developing a software tool to support the deployment of green hydrogen plants.

Authors: Alejandro Ibáñez-Rioja, Pietari Puranen, Lauri Järvinen, Dominik Keiner, Antti Kosonen, and Jero Ahola.

This article is part of a monthly column by LUT University.

Research at LUT University encompasses various analyses related to power, heat, transport, desalination, and negative CO₂ emission options. Power-to-X research is a core topic at the university, integrated into the focus areas of Energy, Air, Water, and Business and Society. Solar energy plays a key role in all research aspects.